4. Accumulate all the cards you can. The more cards you have, the more difficult it is to keep up with timely payments and how much you owe. Department and gas cards are convenient and often offer incentives for signing up such as an immediate discount or discounts on future purchases. However, one or two bank cards such as MasterCard or American Express are all that most people need. They can be used most places, offer better APRs and don't use up your credit availability.

8. Use cash advances from one card to pay another. It's hard to believe that people still do this, but it remains a big problem. This should be a wake up call that you are in serious debt trouble and need to seek help.

4. Accumulate all the cards you can. The more cards you have, the more difficult it is to keep up with timely payments and how much you owe. Department and gas cards are convenient and often offer incentives for signing up such as an immediate discount or discounts on future purchases. However, one or two bank cards such as MasterCard or American Express are all that most people need. They can be used most places, offer better APRs and don't use up your credit availability.

8. Use cash advances from one card to pay another. It's hard to believe that people still do this, but it remains a big problem. This should be a wake up call that you are in serious debt trouble and need to seek help.

THE END ** *** ** LB 59
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(4) Disagree with the statement that one or two cards only are sufficient; I'd take to heart GEORGE's advice to ALWAYS HAVE A BACKUP. If you have only one or two cards, you are left with a very limited choice and are left at the whim of the CC issuer(s).

But agree with the general statement that too many cards are not good. While the reason stated above can be overcome by a useful tool like Bill Payer where you can schedule a payment months in advance, applying for various cards repeatedly lowers your average age of your accounts and drags your FICO down. Also, unless you are disciplined, more cards may mean more temptation to spend

Personally, my happy medium would be about 8-10 cards, applying to no more than 2 cards within any 6 month period -- thus accumulating all the cards you need within a 2-3 year time frame and then forgetting about applying to any credit cards, ever -- unless something happens such as the CC issuer goes out-of-business a la NextCard, or jacks your terms.

(8) Agree. Cash advances typically carry stratospheric interest rates and cash advance fees. It only makes the problem worse. On the other hand, if we were talking about "Balance Transfers" with low or no fees and enticing interest rates .... then I disagree, partially. As long as the total balance goes down steadily, I don't see bouncing balance from one card to another as wrong. FICO may frown on that, but it makes enormous financial sense to me.

Good question, LB59! And a bump ...--
lakpr
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I thought it would be intresting to see other peoples views on it.

And a good reply from you.

Originally posted by lakpr (4) Disagree with the statement that one or two cards only are sufficient; I'd take to heart GEORGE's advice to ALWAYS HAVE A BACKUP. If you have only one or two cards, you are left with a very limited choice and are left at the whim of the CC issuer(s).

But agree with the general statement that too many cards are not good. While the reason stated above can be overcome by a useful tool like Bill Payer where you can schedule a payment months in advance, applying for various cards repeatedly lowers your average age of your accounts and drags your FICO down. Also, unless you are disciplined, more cards may mean more temptation to spend

Personally, my happy medium would be about 8-10 cards, applying to no more than 2 cards within any 6 month period -- thus accumulating all the cards you need within a 2-3 year time frame and then forgetting about applying to any credit cards, ever -- unless something happens such as the CC issuer goes out-of-business a la NextCard, or jacks your terms.

(8) Agree. Cash advances typically carry stratospheric interest rates and cash advance fees. It only makes the problem worse. On the other hand, if we were talking about "Balance Transfers" with low or no fees and enticing interest rates .... then I disagree, partially. As long as the total balance goes down steadily, I don't see bouncing balance from one card to another as wrong. FICO may frown on that, but it makes enormous financial sense to me.

I thought about canceling some cards, but then I realized that they give me a backup, as GEORGE says, and if I do a BT to a card I have another to use for purchases. Also, make sure they're not all from the same bank. Right now I have three Citi cards (counting my Sears MasterCard), two from FirstUSA and one from BofA. I thought about diversifying more, but I don't like Chase and MBNA, so I think my choices are limited.

And I agree that doing BTs to lower your rate makes sense. I am trying to BT as much as I can to lower interest rate cards and pay off from highest to lowest.

Keeping a spreadsheet of balances helps keep them from creeping back up. Each month shows the change since last month, if it's not a decrease I start looking hard at what I'm spending my money on.

Number 8 is basically correct. Ordinary cash advances come with fees and high interest rates. Borrowing to make a payment that includes interest increases your total debt, allowing compound interest to work against you.

HOWEVER, you may not pay interest for a long time on a cash advance. Here's a rare situation in which a short-term cash advance worked to my advantage:

I once used a convenience check from a subprime card to make an unusually large payment of $125 on my Capital One Visa. Less than a week later, Capital One increased my credit limit by $500. I have no doubt that Capital One was reacting to my payment. They gave me four times the subprime cash advance, and at half the interest rate. By the way, there was no fee for using the convenience check, just a high interest rate.

What I should have done was use the Capital One card to buy something necessary, and then use the cash I would have spent on that to pay down the subprime card. Then I would have had an extra $375 in credit available at less than my average interest rate. The only cost would have been about $3 in subprime interest.

Well, my income was too low at the time to pay cash for anything, so I waited a while to pay off what was supposed to be a short-term loan. That increased the cost. However, that one payment did get me more credit of the kind I needed at the time. And I have since paid off the other subprime card.

In a way, this situation is so freakish that it simply proves that the rule applies in normal situations. But it does suggest that a cash advance to dress up your payment record or your utilization ratio could benefit you, where a cash advance to make your minimum payments would not.